A Legislative History of Revenue Sharing

Abstract

Although the general revenue sharing idea was advanced as a solution to several of federalism's problems, it succeeded in mustering enough support only when it was perceived as the way of coming to the aid of financially hard-pressed local governments. Early revenue sharing bills helped to develop the essential ingredients of a workable distribution system and to sort out proponents and opponents of the idea. Former President Nixon made the revenue sharing idea a matter of serious public policy discussion by earmarking $5 billion of his 1972 budget for the program. His proposal called for a "no-strings" aid distribution on a per capita basis modified for tax effort. Congressman Wilbur Mills developed a counter proposal consisting of aid for local governments, tied mainly to urbanization and a measure of poverty for the purpose of supporting a limited number of program and project areas, and general purpose aid for states, tied mainly to state use of personal income tax. In the course of the legislative process the two approaches were modified substantially. The result is a program that is neither pure "no-strings" sharing of federal revenues nor clearly federal aid to achieve well- defined, overriding national objectives as defined by Con gress.